Retiring Early: A Guide for Students
If you are a high school or college student and you know that corporate life is not for you, I will help you plan your escape from the rat race. You should set your sights on at least a $1 million savings.
The first thing you need to do is become a serious saver. You don’t need expensive wheels or tires for your car. You don’t need to make outrageous purchases to impress people. You have to become a serious saver. You need an emergency fund, a Roth IRA, and maybe a health savings account (HSA). You won’t retire early unless you can save money. So get started!
If you still live in your home, you should set aside the money you earn that would go toward rent and utilities, and save and invest it. We’re talking about $700 a month here. Many people in their thirties and forties wish they could save $700 a month. If you can’t save $700 a month, save what you can. I don’t care if all you can scrape together is $50 a month. Save and don’t get into debt. Your income will likely increase over time.
During the summer and on weekends you will want a job. What type of job should you apply for? Something that gives you a good experience or something that pays better than the average salary or something that you love or think you would love. Also, apply for internships. Don’t overlook internships through your high school or college.
Make sure your major is in a field that pays excellent salaries. A liberal arts degree doesn’t give you much credibility. But a liberal arts degree will leave you making student loan payments for 10 or 20 years, money that could go into a Roth IRA.
In your free time learn skills. Learn computer software programs, computer programming, foreign languages, sales skills, accounting, bookkeeping, or learn how to use a switchboard. The list of useful skills goes on and on. Take useful courses in school. Don’t be afraid of a tough class. Don’t be afraid to take the time to learn a skill. You need to learn all the skills you can to be competitive in the workforce. I should add that chatting is an overrated skill.
Become indispensable in your work. If your boss gives you a “to do” list, do it and do it well. You’ll want good references after you graduate.
If you want to make more money than the average person, you need your own business. Running your own business is harder than most jobs, but the earning potential and experience you’ll gain is up there. Remember that many great businesses were started in bedrooms and garages and spare rooms. It is true that 90% of businesses fail in the first few years, but do not let this fact stop you from being an entrepreneur.
Now for the fun part: learning about investing. Read classic investment texts. Read investment books written and recommended by excellent investors. Stay away from being blown up by the gurus of the night; Stick with names like Warren Buffet, Peter Lynch, Frederick Kobrick, Jim Cramer, and David and Tom Gardner. Read the Wall Street Journal. The WSJ had a student discount when I was in school. Learn to analyze and choose stocks. Learn to manage a portfolio. Create a paper or online portfolio and keep track. Take part in a trading tournament and test your investment ideas.
Let me leave you with one more suggestion: take care of your health. Taking care of your health will keep your insurance affordable after you retire.